Arbitration contracts are those tiny printed, legally worded agreements that trap unwitting consumers and employees into signing away their rights to settle grievances in court and limit the amount of compensation they can receive in disputes. Last month, California Governor Jerry Brown signed two arbitration bills into law which were introduced by Senator Bob Wieckowski (D-Fremont) to provide protections for employees and consumers from two of the worst kinds of provisions found buried in arbitration clauses.

SB 1241 aims to prevent out-of-state employers from seeking to circumvent California law by using restrictive contract terms that force its workers to resolve disputes in private arbitrations in other states with less protective laws. Workers are frequently forced to sign binding arbitration contracts just to get a job. The agreements can limit or deny the worker from seeking justice in a court of law and prohibit them from joining a class action lawsuit.

Labor rights advocates have called this new law a victory for California workers because it prevents employers from forcing employees to accept less protective laws of other states. Workers are no longer forced to pay out of pocket to travel to other states just to resolve employment disputes that occurred in California. However, the law contains an exception for workers who negotiate the terms of their employment agreements through an attorney and only applies to contracts that are signed, modified or extended on or after January 1, 2017.

In the past, courts generally favored the law of the state where the case or controversy arose but employees found that preference was overridden by the contract. SB 1241 now codifies case law from judges who have already weighed in on the issue.

The governor also signed SB 1007 which helps sheds light on the secretive arbitration process. Consumers and employees now have the right to a certified court reporter to create an official record during private arbitrations. Consumer advocates say that having a transcript, provided at the expense of the other party, provides consumers and employees with a better shot at justice if fraud occurs behind closed doors. Consumers frequently don’t have adequate documentation to support claims of misconduct in the arbitration process because there are no court reporters to create a record of the proceedings.

While these new laws are an important step forward, the fight to protect consumers’ rights continues. A recent study by the Consumer Financial Protection Bureau found that more than 75% of consumers didn’t know if they were subject to arbitration clauses found in the fine print of credit card and checking account agreements. These agreements are written by corporations to maintain the secretive process that prevents consumers from seeking legal recourse when they encounter unlawful corporate conduct. The Bureau has proposed a rule that would restore consumers’ rights to bring class action lawsuits against banks and financial firms to combat deceptive banking practices.

Consumer Rights Law is designed to protect the rights of consumers and to ensure fair trade, competition and accurate information in the marketplace. Our firm is committed to standing up to big businesses that engage in fraud or unfair practices from gaining an advantage over competitors. If you believe you have you and many others like you have been somehow injured, cheated, or otherwise harmed, give us a call and let us help you protect your rights. At Kabateck LLP, we can help you explore all of your options and ultimately achieve for you the maximum compensation for your harm.